Not that I disagree (in fact I strongly agree), but is Musk really the person we should be taking this from? It's a bit like taking investment advice from your bank, meseems. Not necessarily a bad idea, but you might want to hear with people who don't have an active interest in the placement of your money first.
Obviously a carbon tax would benefit Musk, but the fact that he chose to start Tesla in the first place, when he already had more money than he could ever need, strongly suggests that he actually does care about climate change.
Elon Musk's interests are 100% out in the open, so there is no conflict of interest in him giving advice. Compare that with the cloak and dagger approach of the Koch brothers and Rupert Murdoch, trying to influence people secretively for their own gain to the peril of the planet.
"The only way to meaningfully address carbon emissions is to put a tax on carbon-based fuels, and to refund the entire amount as a dividend to consumers."
That's what I mean. That article, for example, would have been a much more meaningful submission. Musk's vested interests make it harder to take his statements at face value (even if they are entirely correct).
But even if he does it for his own profit, it will help humanity. Also car industry is huge so other mades after introducing this tax would introduce electric cars so Tesla would have same amount of competition.
The impact to SpaceX probably wouldn't be that big.
The amount of fuel required to get to the space station is within an order of magnitude of that required to cross the Atlantic in an aeroplane.
The Falcon 9 uses about 112000 litres of fuel [1] which costs about $200000.
A 10 hour flight on a trans-atlantic jet might burn 150000 litres [2].
Even if the launch cadence increases to much more than what they have been planning (they were on track to launch about one a month this year until the CRS-7 incident), the cost to offset the carbon used in launches is almost insignificant.
There will be other aspects of the business that release carbon as well, of course, but those would be impacted in a similar fashion across the other businesses (manufacturing and logistical costs etc).
Well, if you really want to drill down on this example: the barber doesn't have substantial interests in which type of haircut you get. Tesla has substantial interest in which kind of carbon tax you get -- high carbon tax would be a boon. Doesn't materially effect how good an idea carbon taxes are, though.
Also, do people ask their barber what haircut they should get? I have only ever done a buzz cut or given a description / picture.
I haven't seen anything to suggest he is an expert in macro-economic forecast modelling.
Just because I know how to use a command line doesn't equate to me being an expert in running an IT company. It's not the best analogy but Musk is pretty far removed from what most economists actually do.
Agreed. Musk is probably right about the carbon tax, but unfortunately a conflict of interests this severe should cause most folks to put his energy essays into the "worth thinking about" pile.
I feel the same way every time he talks about colonizing Mars. Oh, the guy with the rocket company thinks we ought to dump 100 trillion dollars into settling another planet? You don't say...
After accounting for emissions during manufacturing, even if you powered an electric car with coal power only, carbon emissions of an electric car are roughly a 25-30 MPG car equivalent.
However, those numbers get much better as the electric power generation mix improves (at both the car factory and your garage). In California, now, an electric car is about equivalent to a 70 MPG car.
Note that significant efforts are underway to reduce the carbon-intensiveness of our electricity generation, so these numbers will get better over time.
I think it's a bootstrapping issue. What does one do first when they want an entirely new power ecosystem? I would argue it's wiser to start with the sexy public facing segment on the demand side (awesome looking electric sports cars) and have the public start this exact conversation and demand the infrastructure changes. Because it seems like a pretty steep climb for one to try to make this huge change simply by supply side first.
It's hard to imagine any process that doesn't have some interaction with carbon-based fuel. So while he is willing to pay the cost along with everyone else, the conflict of interest is still there -- his company will benefit _at the margin_ with a much higher carbon tax, so there's an extent to which he might be talking his book.
That all being said, as a matter of simple fact I think he's correct with only relatively straight-forward caveats (like, "within the lifespan of currently alive humans"). So the issue isn't him talking his book per se as it is him attempting to set the public agenda in a way favorable to him. This isn't something I typically worry about, although given how totally non-surprising the headline is to anyone who has paid attention to energy policy in the last couple decades, it might be worth bringing up.
The benefit of a carbon tax is that no one has to calculate whether the lifetime vs production CO2 cost is greater; it shows up in the prices of either.
The impact on the poor is easy to fix: prebate everyone an amount of money equal to the poverty level energy consumption. It cancels the income effect while preserving the incentive to cut back on any marginal unit of CO2.
It is theoretically possible to develop technology that makes electric cars greatly more co2 efficient over the lifetime than internal combustion engines ever could be. That puts Tesla at an advantage in the long run.
You're getting cause and effect back to front - Musk started Tesla because he wanted to play a real part in reducing emissions. He is on record as saying so. So arguing for a carbon tax is just another effort in that direction, not an attempt to bolster his business.
Not just a carbon tax, but a system of well thought out taxes that cover the negative externalities of every part of pollution so that the market can efficiently allocate investments. For example, most people don't know that coal causes more radiation damage to humans than nuclear. Why is this? Because coal gets released right into the atmosphere, while spent fuel rods get stored away from human contact.
I know that there are political realities that prevent all of the taxes that should be in effect from coming into effect, but those political realities can change once the issue is reframed. Every dollar of pollution tax could, for example, be directed at lowering the income tax rate. This can make the proposal much more tenable to voters and the more right wing side of the intelligentsia that pushes for changes in government policy.
I used to think that carbon taxes were the way to go, but I have seen how effective the fossil fuel industry is at creating FUD. When you consider an effective carbon tax makes all their assets worthless it is not surprising that they will do whatever it takes to block anything other than a nominal carbon tax.
There really is only one way to get past the fossil fuel industry and that is to buy them out. Given the benefit from stopping global warming is spread over the whole community it is actually fairer if we did this rather than push a disproportionally share onto the owners of fossil fuel. Lets get serious and just pay off Exxon and their buddies.
This is a point which gets overlooked pretty often.
It's the same as the value of taxi medallions in the Uber debate. Allowing Uber to operate in a city where technically only medallion owners were supposed to drive is actually really shitty to the owners of those medallions. You open it up, suddenly tell them that their investment is worthless because of a change in regulations. It's really unfair to them. Perhaps the way to quiet the medallion owners would be to pay them like 25% or 50% of what they were worth earlier in compromise bill allowing Uber in. They don't feel so slighted, everyone else gets Uber. That's win-win.
How it would work in this case: pass a compromise bill which involves paying these companies some amount of cash so their shareholders won't feel so slighted. They will give up their fight against carbon taxes, and we avert global catastrophe.
It's not "really shitty" to the owners of the medallions, the risk of a loss of the artificial monopoly should have been baked into the price from the start.
That the prices got as high as they did indicates the confidence the owners had over the stability of their political situation, which I have no sympathy for.
In that case, then the medallions also include the value of owners being able to maintain their monopoly through lobbying efforts.
Whether or not you have any sympathy for them, striking a deal is the best solution.
(Other question: do you have any sympathy for poor people who are hurt a bit by a carbon tax? Elsewhere in this discussion people are arguing against the tax because it hurts the poor. I think it would be a bit weird to be sympathetic to poor people who are hurt a little by a policy decision, but unsympathetic to slightly less poor people who are hurt a lot by a policy decision.)
I don't have sympathy for losses sustained via poor investment decisions. I have lost a small fortune in my life because of mistakes I've made, and I don't want or deserve sympathy for any of it. Losing is part of playing the game.
Poor people just trying to get by (and this included me at many points in my life) are who we should be saving our empathy for. Not wannabe businessmen.
Yes. I think we can say that the carbon owning companies are winning the fight so we need to do something different. Let's stop fighting them and let's start working with them.
Suppose we want a tax of $50 / ton of co2 emitted. Then we do some chemistry and figure that burning 5 barrels of oil emits a ton of co2 into the air. Then the government adds a tax of $10 per barrel. Every producer who buys from the gasoline refiner has to pay the tax.
Individual gas stations and consumers wouldn't have to think about it, since they aren't purchasing from refineries directly. But the prices they pay would increase indirectly.
That seems pragmatic enough to me, and also quite effective.
I live in France and, unless I'm wrong, the highest of the oil-related taxes here apply to the consumers, when you're getting gas at the gas station. Instead, your proposition - to apply a $10 tax on the barrel - would apply the same taxation on any fossil fuel usage, be it plastic fabrication, air transportation, electricity generation, etc... That makes a lot more sense environmentally-speaking.
No you are right. The basic problem is it is much easier to block something new than bring in something new. By trying to fight the owners of carbon you are giving them all the power, because they will find it much easier to block a carbon tax than you will find introducing it. More fundamentally there is no good reason why most of the cost should fall on the owners of carbon rather than the whole community.
The cost of buying out Exxon and co would not be too bad given we can't stop burning carbon today and any change will take 20 to 30 years. We can basically buy an option today on the carbon to be produced 20 years from now and this should be much cheaper.
Notably, all the European oil and gas companies have been calling for a carbon tax for a while now.
I assume part of this is because their gas would compete very well against coal. The reason for the US oil and gas corporations not joining them was the strength of the coal lobby in the US.
In theory all of it. The complication is quite a bit of the "underground carbon" is owned by governments, but these can also be bought off. The key is stop fighting the owners of carbon and start working with them.
A phased-in revenue-neutral carbon tax of $30/ton would increase electricity rates in (most of) the US by < 10%. And could lower income taxes (or if not revenue neutral) reduce the debt. What's not to like?
A few states, and therefore a motivated group of Senators, would be hit disproportionately hard. Places like Wyoming and West Virginia drive a considerable part of their economy from coal, and fracking has led to natural gas windfalls in states like North Dakota.
You would imagine that some large carbon-intensive companies, like Koch or ExxonMobil, would also be impacted significantly.
EDIT: The counterpoint is that a gas tax in particular is quite regressive. The poor pay a larger portion of their income toward necessities like fuel to drive to work. They also are less likely to be able to afford that Tesla. Entry-level service workers can't work from home. They might be commuting large distances from cheaper outlying areas. There are many reasons why (if not managed properly) a carbon tax could hurt the wrong people.
It still seems like the right idea to me, though! We need to avoid calling it a 'tax' though, to avoid the Grover Norquist influence...
As usual, probably the poor & lower middle class unless the income tax reduction were explicitly directed to the lowest tax brackets to limit impact on working poor.
Those below the poverty line would see an increase in their energy costs at the pump and and home electric bills as energy producers raise rates to compensate (and the impoverished are the least able to convert their use, so will be the longest affected by the transition).
The answer used to be "aluminum smelters" (aluminum, aka "frozen electricity").
Interestingly, the aluminum smelters in the mountains behind Portland closed down when the datacenters moved in and bought all the cheap hydro electricity they used to use.
My guess is that a tax increase on electricity will hit the Google/Facebook/Amazon/Apple/Microsoft and other "cloud businesses" pretty hard...
Aluminium smelters in Germany are actually getting a big subsidy. They're varying their electricity usage based upon the output of Germany's solar/wind farms and getting paid a hefty sum to do so (possibly too much).
This is having a negative impact on other smelters across the world.
Effectively they're doing the same job we were always told batteries would do.
If they're paying a fair amount for electricity, it's not a subsidy. And it's probably not a minute-timescale change like batteries. Energy storage and batteries are quite different things.
The big victims are the owners of fossil fuel deposits and infrastructure. Have a guess who is funding all the FUD about global warming.
Personally I think we should just buy the fossil fuel owners out at current market prices and shut them down as soon as possible. FUD in this area is just too effective to counter with logic or science so lets pay them off. If we wanted to be really clever we could do a 1 for 1 swap - Exxon we are buying your oil field and here is a wind farm in return.
You should stop casting these guys as villains, it obscures the main point of your argument. You would probably do the same lobbying if you were in their position. (Rather, if you were a major shareholder in Exxon, you would demand that managers do it.)
Just think of this in terms of Exxon &c having an effective negotiating position for blocking the carbon tax. We don't have to buy things at current market prices, but at a discount. Recognizing that there's room for negotiation is what everyone overlooks.
I didn't mean to cast Exxon and co as villains, just explain why. Yes I think we need to recognise that they have a very strong hand and deal with it head on. Trying to fight them will only mean we all lose.
The proposed tax is basically a spending tax, much like a sales tax. It would effectively raise the price of any products/services that rely on carbon-based energy to be made/delivered.
Remind me: how does a spending tax disproportionately affect the poor? The tax goes into a local/federal budget, where poor disproportionately benefit from it (compared to what they put in).
Also, the arguably biggest global challenge in the next decades is going to be to slow/reverse the adverse effects of the global warming, which WILL disproportionately affect the poor (which have less ability to adapt or move). So how is doing something about global waring really disproportionately affecting the poor on the long run?
Some people need to scrape together cash to buy enough gas to get to work. Poor people spend a disproportionate amount of their income on necessities like fuel for an aging inefficient vehicle, electricity or natural gas to heat a cheaply-constructed home, and factory-farmed food created with cheap nitrogen fertilizer.
All of those necessities get more expensive with a carbon tax, so we need a way to cushion the impact on those who struggle to pay for the basics.
While the impact of global warming does impact the global poor quite heavily (think of places like Bangladesh) it doesn't really hurt the poor in developed places much more than the rich in developed places. I was a lot less worried about El Niño when I rented an apartment, for example.
> how does a spending tax disproportionately affect the poor?
Because they need to spend more of their income in order to survive.
If you spend all of your income, a 10% sales tax reduces your income by 10%. If you only need to spend half of your income, a 10% sales tax reduces your income by 5% - or less, if the money you don't spend earns interest.
Poor living in rural/exurban areas, spend more of their money on utilities & transportation overall
You're assuming here that the money will be spent on the poor, but we really have to make sure that will actulaly happen if we want the carbon tax to have fair distributional implications
One of the fun things about this "debate" is that people complain about exactly the things in the proposal that are designed to benefit the poor, as affected by this tax. It's almost as if everyone assumes the worst possible implementation, instead of looking at the actual proposal.
>Carbon tax in Australia. All extra expenses were passed along down the chain to the consumer. We got rid of the tax. Prices stayed the same.
In general if a corporate think tank said something happened or something is going to happen and it impinges upon their profits, there's a better than even chance they're lying through their teeth.
See also: minimum wage, regulation of the financial sector, anything to do with debt, etc.
Carbon tax becomes a peculiar piece of legislation when viewed from Pirate Party's perspective (not necessarily that I agree with it, no ad hominem please). According to Rick Falkvinge [1] legislation must:
* Be targeted at a problem
* Solve the problem
* Not create other problems in best case, worse problems in worst case
* Be evidence based
Carbon emission is considered a problem because it contributes to climate change. For carbon tax to be considered targeting a problem we must accept that climate change is a problem.
Does it solve a problem? At least not directly. Taxes on tobacco and alcohol do not eliminate consumption, prohibition in US created a Mafia, jail-time for drug possession does not eliminate consumption, we have hard evidence confirming that.
Such tax hinders accessibility, though. Since at least transportation is fossil fuel dependant, more or less everything (commodities including: food, public transportation) will get more expensive, thus less accessible.
Do we have hard evidence (numbers, not general economic speculation) that x level carbon tax will lower carbon emissions by y?
You don't have to reduce carbon emissions to zero to solve global warming, you just have to discourage emissions to some degree. That is exactly what a carbon tax does. It directly solves the problem.
Revenue-neutral tax is the key to dismissing the point about accessibility. You can take the tax revenue and mostly give it to poor people who are hurt the most by the tax.
A country could just offer to buy a increasing amount of zero emission electricity and sell it on the free market until electricity was no longer generated from sources that yielded carbon.
The same approach could work for battery cells that could be used in cars until non-electric vehicles were no longer competitive.
This could be funded by that country's current (probably) progressive tax system.
This doesn't cover air, sea, heating and agriculture emissions. But a carbon tax may not be an adequate incentive to develop electric aircraft or cargo vessels in any case.
The parent is arguing for extreme subsidization to alter the market for electricity and vehicles (etc).
They effectively want the government to spend a lot of money to bankrupt the fossil fuels industry and fossil fuel vehicles, with subsidies toward the generation of renewables and producing electric vehicles.
They're wrong that spending is easier however. Republicans control Congress and the US made a massive mistake in taking on ~$15 trillion in new public debt between 2000 and 2015. Simply put, the US doesn't have vast excess spending room (which means it would require tax increases or new taxes). It would cost trillions over a few decades to pull off the parent's plan.
I agree that a subsidy is infeasible policy. But it wouldn't be effective even if it were feasible to pull off.
Suppose the government gives out free Priuses. Well, then people are going to drive more. Even though some people may be driving more fuel efficient cars, it's not clear that total carbon emissions decrease.
Suppose the government provides free solar cells for everyone. Then people will use a lot more electricity. But solar cells require some carbon emissions to produce, and since people use so much more electricity overall, it's not clear whether carbon emissions decrease or increase.
Either way it's just a totally goofy thought experiment, since a carbon tax is exactly the right answer, and this subsidy idea is so misguided that it could possibly even increase carbon emissions
The question is who will pay that tax? In Musk vision governments should lower other taxes (which one?) and introduce carbon tax.
I am afraid that the devil is in the details and it may turn out that this tax will be paid mostly by car owners (rising delivery costs, so food prices would grow) or people in rural areas who use coal heaters. The poor will suffer most in such case.
I am also afraid that governments wouldn't do anything else to lower carbon emission - doing that would be stupid, they get more money thanks to large carbon emission.
I think it is time to figure out honestly, without any eco/anti-eco bullshit what it the best (clear, cheap and practical) way to produce energy.
I suspect this will never be done, as eco people would have to admit that nuclear energy is a viable option to go (I don't believe we can base modern economy on energy sources that depend on weather). Anti-eco people would have to admit that fresh air is something more important than coal mine owners interest (and coal mine workers interest too).
I really regret nuclear energy had such a bad press and, as a result, there weren't any significant innovation in that area (in particular how to reuse nuclear wastes).
Well, lower taxes on poor people. Increase welfare, subsidize public transportation and other things that help transfer money to people who are hurt by the tax.
"Figure out the best way to produce energy" is not something we can figure out posting on HN, or even in a presidential debate. It is a complex and very uncertain question, but since it is a question of innovation, it is the kind of question that markets are very good at answering. A carbon tax directs the market toward finding out the solution efficiently.
> I am afraid that the devil is in the details and it may turn out that this tax will be paid mostly by car owners (rising delivery costs, so food prices would grow) or people in rural areas who use coal heaters. The poor will suffer most in such case.
You cannot just introduce tax and hope for best when the whole tax system and tax recovery is a joke that hurts mainly SMBs. Its not like big corporations will pay them anyway.
If you want to introduce a tax on something so intangible as emissions, you would need to build easy to track and easy to use tax system.
If only a few countries introduces/enforces this tax it will simply drive the huge carbon emitters to move their emissions to other countries. The only people that will be hurt are those that are too small to move.
US and China are unlikely to go with it or they will end up playing the rules. The same as it is now.
Also - you are right, taxing will work. Its not like corporations and huge manufacturers will play the system and avoid paying taxes or getting them back through loopholes.
Only ones affected will be mostly SMBs and regular folks - as always.
In my opinion a carbon tax is also interesting for oil and gas companies. As the carbon tax would enable them to compete on technologies that minimize the carbon output of their machines. It would enable them to differentiate from each other.
When it comes to carbon reduction using tax, tradable, caps or any other instrument that tries to use the price system to alter consumption levels… I think you need a very sober economic estimate of efficiency and cost. A tax is not very different economically from other price increases in carbon fuels. These prices vary a lot over time. We also already have fairly variable taxes between countries on the use of carbon fuels for (eg) cars.
The price varies a lot. Consumption does not vary that much or that fast. This is called price inelasticity of demand. Demand does not drop much for incremental increases in price. This means that to decrease consumption we'd need a very high carbon tax. In Europe, petrol has been taxed heavily for a long time and prices are higher than in the US. The long term effect has been somewhat smaller cars, not a completely different transportation market.
There are also the realpolitik problems. When the public is concerned about something (say water), it's not impossible to convince the public (consumers) to bear a burden. But, entrenched economic interest are harder to sway or wrangle. This leads to weird regulation. An area where water use is distributed 15/35/50 between households/industry/agriculture will successfully enact water restrictions of some sort on households, the minor participant. There are equivalents in energy.
I'm not saying do nothing, but I am saying be smart. Some plans are winers from a public debate perspective but do not solve the problem. I am against a plan that acts a a regressive tax affecting the middle and lower classes harshly unless it is going to have a big impact.
If a household with $4,000 annual fuel costs (heating and transport) is to pay $7,000, the overall expected result better be big steps towards carbon goals. I have a hard time seeing this happen.
Lets do a back of the envelope: take that $5.3 trillion externality at face value. Lets assume the world's 2 billion top consumers pay the majority of it. Call it 4 trillion, $2k each, $8k for a family of 4. How much of a reduction will we see? 10%? 25%?
I'm not completely down on the idea. Elon Musk suggests lowering taxes elsewhere, being revenue neutral. This is a realistic politics problem again. Lets say we can do that though, globally. Reduce bottom level income tax and value added taxes by this much, people would be less harmed. Still, transport & heating make up a large part of poorer people's income so it's hard to think of a way this would not be regressive. I'm sure it is theoretically possible, but very hard.
At the end of this ramble, I'm not sure where I am. I'd like to see a realistic estimate of actual reductions in emissions. This is too big a deal not to fix the problem.
The best solution I've seen is a "fee and dividend" system, where a carbon fee is collected and the proceeds are rebated in equal amounts to every legal resident of the nation.
This means that, when gas prices go up, a lower-class person whose carbon footprint is exactly that of the average citizen will be reimbursed for the extra gas money by exactly the right amount. And the tax ends up being not regressive.
Compare the carbon footprint of a well-to-do businessman who flies coast-to-coast on a monthly basis with that of a working-class guy who drives ten miles a day and heats his house with oil. The former is greater then the latter by several times. The working-class guy contributes a relatively small share to global warming, but bears an equal share of the public cost induced by the changing climate. Under the fee-and-dividend system, every man reimburses the public for the cost that he is imposing on them through his CO2 emissions, and is reimbursed by everyone else for the cost they impose on him.
Because of this I argue that a carbon fee and dividend is the right policy from a social justice perspective, and should be enacted even if it is not going to be sufficient to push us as a society off of fossil fuels.
>> Don't you hate when Fox News and the other MSM spin-meisters use simple tricks to skew and misrepresent data and statistics? How about when the World Meteorological Organization does it? Or NASA? Or the Journal of Climate? Or GISS? Join James for today's thought for the day as he shows you some of the grade school level parlour tricks the global warming alarmists use to misrepresent their data and bamboozle the public.
His quibble with the bar graphs there doesn't make a lot of sense given that a Y-axis starting at 0 degrees is just as arbitrary as starting it at 13.4 degrees.
Then we really lucked out, although it would still be a bummer about the corals. (And shell fish, acidification is already disrupting oyster farming in Washington)
If the choice is between people having electricity and clean, running water in India, or corals dying out, it isn't moral to choose the corals. Human lives matter.
A carbon tax will non proportionally harm developing nations and the poor in all nations.
Why would Tanzania have to pay more for fuel because it has 55 yr old power plants that pollute much more than France's shiny new ones?
The agricultural industry is responsible for 30% of emissions, if we talk about food in general including transport, processing, manufacturing and distribution then 50-60% of our carbon emissions come from feeding us.
A carbon tax can increase food prices worldwide by 3-400% and the poorer you are and the more the food has to travel the more expensive it will be which again puts many developing nations at a disadvantage.
Those figures don't sound right to me, the US spends about 8% of it's GDP on food, that isn't likely to add up to 50-60% of emissions.
A carbon tax doesn't have to harm the poor either, it can be neutral if it's offset with tax decreases in other areas. There is even an argument that the developing world doesn't raise enough tax, without taxes you can't provide good health care to the poor.
Anyway, I don't see how such a tax would single out the poor more than others.
The negative externalities of burning gas to move cars (not to mention weed whackers and lawnmowers etc., which are somehow exempt from emissions controls and pollute horribly) need to be accounted for somehow. See: The tragedy of the commons.
The poor spend a considerably larger portion of their income on food, heating, and transportation which will be the 3 areas that suffer the most by a generic carbon tax.
The food and agricultural industries represent most of our carbon emission as it is which will increase food prices.
The poor would more likely to live in housing with inefficient heating burning either fossil fuel or using electric heating, and the poor are more likely to have to commute longer distances and are more likely to be dependent on both older vehicles and vehicles such as trucks and van which produce more carbon than newer efficient cars.
This discrepancy will affect both the poor people in the developed world and developing nation that cannot afford the latest and greatest in new technologies, you won't be driving a Prius in central Africa you'll be driving a jeep from the 1980's.
A flat carbon tax is very similar to VAT which is well known to affect lower income families considerably more than higher income ones which is why countries which use a VAT system rather than sales tax often exempt certain products such as food from it or tax it at a lower rate.
When you spend most of your money on consumables or products which will be used to the point of not being able to be resold you are effectively bearing a more burden than those who spend a much smaller portion of their income on consumables and buy products which hold their value well as VAT is designed to capture the value of any potential future resells unlike a direct sales tax which only taxes a single point of sale.
And if we make the carbon tax either deferential or tradeable (e.g. the old carbon caps) it will only result in developing nations being exploited further, if you can buy a nations carbon cap cheaply you'll do so, if the carbon tax in that nation is only pennies on the dollar compared to yours then you'll move your factories there and pollute at will because that would be the economical way to do business.
There isn't a simple solution and while carbon tax is the easiest there's a good reason why allot of economists fear it even more than they fear global warming.
Yeah I was a big fan of Elon Musk, and then he says this. Ugh.
Tax never solved anything except letting politicians take your money for their own uses.
He's fallen for it.
I am worried. Even if we switch to other forms of energy, aren't we heating up the planet? Or do we expect it all to be radiated faster to space over time?
I don't think will ever work. There are countries where taxes are way higher than US. For example in Italy [1] we are around 50% (including VAT and local taxes) and other than decreasing the productivity of companies it never had a "mind" impact. In fact Italy is one of the countries with most cars (per citizen) and that invest less/nothing in alternative energies.
That's just a generic across the board tax you are talking about and linking to isn't it? Rather than a specific incentive/disincentive in one area (carbon emissions).
> Musk, who has pushed for a carbon tax before, said the tax should be revenue neutral and phased in over a period of years. A revenue neutral tax means governments would still receive the same amount of money despite a change in the tax code. Under Musk’s scenario, taxes would be weighted heavily on carbon, and reduced in other areas. This approach already occurs, Musk said, citing how taxes are higher on cigarettes and alcohol than fruits and vegetables.
He's proposing lowering other taxes simultaneously, so the government gets the same amount, no tax hike necessary.
50% tax on everything across the board is different from differentially taxing carbon. Taxing everything at once just slows down all economic behavior at once, but putting an additional tax on carbon makes people shift their behavior to avoid that tax in particular.
> "This approach already occurs, Musk said, citing how taxes are higher on cigarettes and alcohol than fruits and vegetables"
This is a good point, but generally discouraging the use of cigarettes or alcohol through taxation only effects people who consume those products. If you raise the tax on carbon, that cost could be passed on by businesses in unexpected ways. If the cost of me shipping vegetables across the country goes up by 2%, I'm just going to increase what I charge for shipping by at least 2% and the cost could well be passed on directly to consumers. Eventually I might be outcompeted by someone who has a fleet of electric trucks. Maybe, at some point. But until that happens, people could end up paying slightly more than they do now for essentials.
Maybe this effect is covered in the policy details or by the term "revenue neutral". Either way a carbon tax is probably a good idea, but the chain of cause and effect isn't so clear.
We tax things, but then distribute the tax revenue among the citizenry. The cost absolutely will get passed on, but that is accounted for in the end when you receive a check for ~1/300,000,000th of the net tax paid. The increased cost of essentials would be a total wash, as presumably everyone is paying roughly the same -- except to the extent that by pricing the externality, there might be space to undercut the market with a non-polluting option where one didn't exist before, encouraging R&D.
This is simply a consequence of how prices communicate information through the market, and is the whole point. End-consumers should pay more for things that have a (direct or indirect) carbon footprint. Otherwise why would they change their behavior?
